US stocks steadied on Tuesday as Wall Street waited for the next signal on when the war with Iran may end.
The S&P 500 dipped 0.2%, a day after its latest wild swings caused by extreme moves in the oil market. The Dow Jones Industrial Average fell 34 points, or 0.1%, and the Nasdaq composite edged higher by less than 0.1%.
Oil prices, meanwhile, remained sharply below their peaks hit on Monday. Such spikes have been rocking financial markets worldwide because of worries that the war could block the global flow of oil and natural gas for a long time.
The price for a barrel of Brent crude, the international standard, settled at $US87.80. That's down 11.3% from its settlement price the day before, but much of that drop happened on Monday before the US stock market finished trading. That's why it did not give much of a boost to US stocks on Tuesday.
All told, the S&P 500 fell 14.51 points to 6,781.48. The Dow Jones Industrial Average dipped 34.29 to 47,706.51, and the Nasdaq composite added 1.16 to 22,697.10.
Mixed signals keep markets on edge
Oil prices plunged on Monday afternoon from a high of nearly $US120 per barrel, oil’s most expensive level since 2022, after President Donald Trump told CBS News he thought "the war is very complete, pretty much". That raised hopes that the war may end relatively soon, which could allow oil to flow freely again from the Middle East to customers around the world.
But Trump's comments later on Monday, after the US stockmarket finished trading, were not as clear. A spokesperson for Iran's paramilitary Revolutionary Guard said that "Iran will determine when the war ends". Iran launched new attacks on Tuesday at Israel and Gulf Arab countries.
That has Wall Street waiting for the next clue about how long the war may last.
Strait of Hormuz threat looms over oil
One point where Trump remained clear was his desire to keep the Strait of Hormuz open. The war has effectively blocked the waterway off Iran's coast, where a fifth of the world's oil sails on a typical day. That's been a central reason for extreme swings in oil prices recently, which have dominated other financial markets and raised worries about the global economy.
"If Iran does anything that stops the flow of Oil within the Strait of Hormuz, they will be hit by the United States of America TWENTY TIMES HARDER than they have been hit thus far," Trump said in a posting on his social media network late on Monday.
Stagflation fears return as uncertainty drags on
The US stockmarket has a history of bouncing back relatively quickly from military conflicts, as long as oil prices don't stay too high for too long. Uncertainty about whether that may happen this time around has led to stunning swings up and down for markets worldwide, often hour-to-hour.
If oil prices do stay high for long, household budgets already stretched by high inflation could break under the pressure. Companies would see their own bills jump for fuel and to stock items on their store shelves or in their data warehouses. It all raises the possibility of a worst-case scenario for the global economy, "stagflation," where growth stagnates and inflation remains high.
